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Plaintiff sued her former employer, Doctor’s Medical Center of Modesto, for disability discrimination. The Medical Center moved to compel arbitration of her claims according to an arbitration agreement she signed. The trial court denied the motion, finding the agreement “to be unconscionable in its terms based on the unequal bargaining power between Plaintiff as employee and Defendant as employer; the general nature of the terms, i.e. without specific reference to the nature and extent of discovery and that findings of fact and conclusions of law must be included in the written decision; the ambiguity surrounding the provisions concerning the right to recover attorney’s fees and costs; and the absence of any provision for limited judicial review.”

Horvitz & Levy appealed on behalf of the Medical Center and the Fifth District Court of Appeal (in Fresno) reversed in an unpublished opinion. Noting that “both procedural and substantive unconscionability must be found in order to invalidate an arbitration agreement,” the court held that, “although there were elements of procedural unconscionability in the presentation of the arbitration agreement, the terms of the agreement were not substantively unconscionable.”

The court also weighed in on the much-watched issue of how the Federal Arbitration Act and the U.S. Supreme Court’s interpretation of the Act affect the traditional California standards for reviewing arbitration agreements. The court stated that unconscionability is still a ground for invalidating arbitration agreements, but it questioned whether certain law stated in a key California Supreme Court arbitration decision (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83) “survives recent United States Supreme Court decisions.” The court nonetheless concluded that, even if Armendariz “remains good law, . . . the arbitration agreement before us meets its requirements and therefore is not substantively unconscionable.”